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By Wilson, Zeithaml and Bitner

Chapter 1

Services Marketing

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Objectives for chapter 1:Introduction to services

Explain what services are and identify important trends in services.

Explain the need for special services marketing concepts and practices and why the need has developed and is accelerating.

Explore the profound impact of technology on service.

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Objectives for chapter 1:Introduction to services (continued)

Outline the basic differences between goods and services and the resulting challenges and opportunities for service businesses.

Introduce the expanded marketing mix for services and the philosophy of customer focus, as powerful frameworks and themes that are fundamental to the rest of the text.

Introduce the servuction system model and the concept of the services triangle

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Examples of service industries

Healthcare Hospital, medical practice, dentistry, eye care

Professional Services Accounting, legal, architectural

Financial Services Banking, investment advising, insurance

Hospitality Restaurant, hotel/motel, bed & breakfast Ski resort, rafting

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Examples of service industries (continued)

Travel Airline, travel agency, theme park

Others Hair styling, pest control, plumbing, lawn maintenance,

counseling services, health club, interior design

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Figure 1.2

Tangibility spectrum

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

Advertisingagencies Airlines

InvestmentManagement

Consulting

Teaching

Fast-foodoutlets

Fast-foodoutlets

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Insert Table 1.1 from text% of GDP attributable to service

2006

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Why study Services Marketing?

Service-based economies Service as a business imperative in

manufacturing and IT Deregulated industries and professional service

needs Services marketing is different Service equals profits Service and technology

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How technology has influenced the development of services

Provided the potential for new service offerings Offering new ways to deliver service Enabling customers and employees Extending the global reach of services The Internet is a service The paradoxes and dark side of technology and

service

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Table 1.2

Eight central paradoxes of technological products

Source: D. G. Mick and S. Fournier, “Paradoxes of Technology: Consumer Cognizance, Emotions, and Coping Strategies,” Journal of Consumer Research 25 (September 1998), pp. 123–47.

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Table 1.3

Goods versus services

Source: A. Parasuraman, V.A. Zeithaml, and L. L. Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research,” Journal of Marketing 49 (Fall 1985), pp. 41–50.

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Characteristics of servicescompared to goods

Intangibility

Perishability

Simultaneousproduction

andconsumption

Heterogeneity

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Implications of intangibility

Services cannot be inventoried

Services cannot be easily patented

Services cannot be readily displayed or communicated

Pricing is difficult

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Implications of heterogeneity

Service delivery and customer satisfaction depend on employee and customer actions

Service quality depends on many uncontrollable factors

There is no sure knowledge that the service delivered matches what was planned and promoted

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Implications of simultaneous production and consumption

Customers participate in and affect the transaction

Customers affect each other

Employees affect the service outcome

Decentralization may be essential

Mass production is difficult

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Implications of perishability

It is difficult to synchronize supply and demand with services

Services cannot be returned or resold

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Challenges for services

Defining and improving quality Designing and testing new services Communicating and maintaining a consistent

image Accommodating fluctuating demand Motivating and sustaining employee

commitment

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Challenges for services (continued)

Coordinating marketing, operations, and human resource efforts

Setting prices Finding a balance between standardization

versus personalization Ensuring the delivery of consistent quality

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The Services Marketing triangle

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Traditional marketing mix

All elements within the control of the firm that communicate the firm’s capabilities and image to customers, or that influence customer satisfaction with the firm’s product and services: Product Price Place Promotion

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Expanded mix for servicesThe 7 Ps

Product Price Place Promotion People

All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment.

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Expanded mix for servicesThe 7 Ps (continued)

Physical evidence The environment in which the service is delivered and

where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.

Process The actual procedures, mechanisms, and flow of

activities by which the service is delivered—the service delivery and operating systems.

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Table 1.4

Expanded marketing mix for services

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The servuction system model